The Indian quick-commerce and logistics player, Dunzo, has found itself in the midst of significant developments as it faces its second top-level exit. Mukund Jha, the co-founder and chief technology officer of Dunzo, is set to depart the company, raising questions about the future of the startup. This news comes at a time when Dunzo is actively seeking fresh investments, with discussions regarding a funding round of Rs 300-400 crore underway.
Reliable sources familiar with the matter have revealed that Dunzo has received two to three term sheets from investors interested in participating in its funding round. While the fundraising discussions continue, it’s worth noting that Reliance, one of Dunzo’s significant backers, has stated that it does not intend to acquire the company or increase its equity stake. However, Reliance has expressed its willingness to support Dunzo’s fundraising efforts, potentially contributing to cover any funding gaps.
Reliance currently holds a 26 percent stake in Dunzo, and it has previously injected around Rs 300 crore into the company, alongside Google, to sustain its operations. This funding injection is expected to provide Dunzo with the financial stability to continue its operations for another three to four months.
Dunzo, backed by Reliance and Google, has been navigating a series of challenges recently. Alongside Mukund Jha’s impending departure, the company has once again deferred employee salaries by an additional three months, according to sources.
The news of Mukund Jha’s exit follows closely on the heels of another co-founder, Dalvir Suri, announcing his departure from Dunzo. Suri had been part of Dunzo since 2015, and his exit underscores the changes taking place within the company.
In response to inquiries, a Dunzo spokesperson stated that Mukund Jha remains an integral part of the company’s leadership team, even as the organization undergoes restructuring with new leaders taking charge of key initiatives. However, it’s worth noting that Jha has reportedly stepped back from day-to-day operations at the company, and an official announcement regarding his next move is expected in the coming weeks.
Both Mukund Jha and Dalvir Suri have resigned from Dunzo’s board, with Jha’s resignation dated September 1 and Suri’s departure occurring on August 29, as reported by media outlets.
Over the past two months, Dunzo has witnessed a series of board member exits, including Ashwin Khasgiwala and Rajendra Kamath of Reliance Retail, and Vaidhehi Ravindran of Lightrock, all of whom left in August. Sources suggest that some investors with board seats took this action to mitigate additional liabilities beyond their role as minority investors.
Additionally, it has been reported that Reliance’s representatives on Dunzo’s board have stepped down, potentially to avoid any liabilities in case the fundraising efforts do not materialize. An email inquiry sent to Reliance regarding board nominations and the reasons for stepping down did not receive a response.
As a result of these developments, Dunzo’s board currently comprises only three members: Kabeer Biswas, the co-founder and CEO of Dunzo, Siddharth Talwar of Lightbox Ventures, and Hongjin Kim of STIC Investments.
Notably, Mukund Jha, Dalvir Suri, and Ankur Aggarwal, the co-founders of Dunzo, do not have ownership stakes in the company. Kabeer Biswas, on the other hand, holds a 3.6 percent stake in Dunzo.
Amidst these leadership changes and ongoing financial challenges, Dunzo has once again deferred employee salaries, this time extending the salary deferment period until as late as February 2024. The company had previously deferred salaries in June and July, affecting over 50 percent of its workforce, with salary caps set at Rs 75,000 regardless of an employee’s pay package.
Dunzo has communicated to former employees that pending payouts will be cleared by January or February of the following year, with a promise of a 12 percent interest per annum on the service period.
Since its inception, Dunzo has secured approximately $500 million in funding from prominent investors, with Reliance holding the largest share at 25.6 percent and Google as the second-largest backer with approximately 19 percent ownership. Lightrock, with an 8.6 percent stake, is another significant investor in the company.
Other notable investors in Dunzo’s delivery platform include Blume Ventures, Lightbox, and Alteria Capital, among others.
